LIPA Turnover Costs Will Cost Ratepayers $401M

John MittyMonday, April 7, 2014

The Long Island Power Authority (LIPA) was replaced in part because they were costing ratepayers through their inefficient procedures. Parting ways with LIPA and replacing the company with PSEG will not come cheap though. Long Islandrate payers already will need to pay $263.5 million in costs related to LIPA’s departure. Now it has just come to light that ratepayers will also need to fund an additional $401 million in future payments relating to pensions and insurance plans for energy workers.

Will LIPA be seeking to collect these costs during the rate freeze? Tom Falcone, LIPA CFO, is quick to state that LIPA has no intention to charge customers for the turnover costs until after the rate freeze ends in 2015. According to Falcone, at least some of the costs will be paid through the funding of pension plans for PSEG workers—in other words, the costs have already been built into the existing rate plan, which may come as some consolation to ratepayers. Still, while many Long Islanders are glad to say goodbye to LIPA and welcome a new team onboard, the expensive costs of LIPA’s failures on Long Island continue to be felt and will plague customers over the years to come.

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